Going abroad or spending on foreign websites? There's one way to spend that smashes most others. Get a specialist travel credit card and you can spend overseas knowing you've got a near-perfect exchange rate worldwide.

This step-by-step guide includes best-buy cards, as well as the cards to avoid, and shows you how to check what your card's currently charging you when you use it overseas.

The 10 need-to-knows when spending abroad

Before you go on holiday, there are some things you need to know about how credit and debit cards work overseas. Get this wrong and it can cost you large, so please read the following (even if you only have time to read and remember the headlines, it should help protect your pocket).

Specialist travel cards are so good for spending abroad because they don't charge fees for it

Use your everyday plastic while on holiday and you could be hit by a host of hidden charges (for full details, read the hidden holiday spending charges note). These include:

But there are credit and debit cards that don't charge these fees, making them ideal to use when you're on holiday or buying from overseas websites.

Use this checker to find out what you'll pay when using your existing cards. If you're paying huge fees every time you use your card abroad, check out our best buy cards below to find cards that don't charge.

How much does your card charge? Find how much you pay to use your card abroad

You can save £100s per holiday using a specialist card

Ultimately, when abroad, you want to pay for only what you buy, yet using any bog-standard card means you're paying to pay, too. Here's how much spending 1,000 actually cost, in pounds, when we made comparisons on 26 June 2017 using our Travel Money Comparison tool (we assumed five 100 cash withdrawals and 20 transactions on the cards).

As you can see, paying the wrong way could cost you over £100 more than paying the cheapest way. But the winner is simple: apply for a specialist overseas credit card, then use it every time you go.

If you're using a credit card, ALWAYS pay it off IN FULL every month

As mentioned above, specialist overseas credit cards can be the best way to spend when you're on holiday. However, they can quickly turn into one of the worst ways if you're not disciplined enough to pay them off.

Watch out for the interest trap. Always follow the golden rule:

Set up a direct debit to repay in full every month, or the interest charges dwarf the cheap-currency gains.

Also bear in mind that direct debits may be marked 'inactive' if a card hasn't been used in a 13 month period - so if your hols are infrequent with more than a year between them, check the direct debit is still in place.

We believe credit cards almost always beat debit cards if you're looking for the best way to spend overseas.

Credit cards have the advantage that they're easier to get  you can apply for it whomever you bank with, whereas for debit cards you're likely to have to switch accounts or open a new account that you then have to manage.

Credit cards also give you the powerful Section 75 protection  a legal recourse for anything costing between £100 and £30,000 that you pay for directly on the credit card, meaning the credit card company's liable along with the retailer if anything goes wrong  important if you buy something on holiday when it's not so easy to take items back if they're faulty.

There's also more choice of credit cards  this guide features ten top cards you can apply for, whereas there are only two bank accounts that are open to all.

However, there is one exception where credit cards don't usually win: if you mostly spend cash while you're on holiday. Most of the credit cards charge either fees or interest, or both, when you take cash out abroad (one of our top picks, Barclaycard is the rare exception  it doesn't have any providing you repay in full).

But specialist overseas debit cards don't charge fees or interest for cash withdrawals, meaning they can often be cheaper.

If they ask 'want to pay in pounds or euros?', say 'euros'

Many overseas hotels, shops and ATMs ask this when you pay by card, especially in Spanish tourist resorts. If you choose pounds, the retailer does the currency conversion  but rates can often be poor compared with letting your card do it (choosing euros). For a great comparison of rates, see Martin's euro analysis.

If you've got a top overseas card, always choose the local currency, as your card does the exchange and it's unbeatable.

If you're using a bog-standard credit or debit card, it's touch and go. Sometimes the card machine will show you the 'non-sterling cash fee'. If this is under 2.5%, go with pounds. If it's over, pick the local currency.

Use our eligibility calculator before applying for a speedy check of which cards you're most likely to get  and protect your credit score

Usually, the only way to know if you'll be accepted is to apply, but each application marks your credit file. But our Travel Credit Cards Eligibility Calculator quickly shows your odds of getting almost every top travel credit card so you can find the ones most likely to accept you, thus minimising applications.

Quick questions

How does the Eligibility Calculator work?

It uses a 'soft search', which you will see on your credit file but lenders won't, to give us an indication of your credit score. We then match this against lenders' criteria for acceptance so we can show you the odds of getting each card (however, we can't check you for Nationwide).

Once you have this knowledge, it's easier for you to know which card to apply for. This means you're less likely to be rejected and less likely to need to apply elsewhere, which would add another mark on your credit file.

Will my credit score affect the deal I get and my credit limit?

When you apply for any credit card, the provider checks you to match you up against its wish list for what is a profitable customer (full info on this and how to boost your chances in our Credit Scores guide). This doesn't just dictate what products you'll be accepted for but also how good the ones you actually get are. With travel credit cards, it has two main impacts:

They always give a variable APR depending on credit score. Every credit card APR (the annual interest rate you pay on your card) is a 'representative' rate. This is defined in the rules as meaning they only need to give the advertised rate to 51% of accepted applicants. The rest can be, and sometimes are, charged more.

Having said that, the aim is to repay the card IN FULL every month, so if you do this it's less of an issue, as you'll never be charged the APR.

Lower credit scores tend to mean you get a smaller credit limit. If this happens, don't automatically jump to get another card instead; at least use what they've given you. See the Credit Limit Too Low? guide.

Unfortunately, there's no system that can predict exactly how card firms will react. But, as a rule of thumb, the higher the chance the eligibility calculator gives you, the closer to the rep APR and the higher credit limit you should get.

Or join our Credit Club for a full credit health check, including your free Experian Credit Report, Affordability Score and Credit Hit Rate

The MSE Credit Club is a game-changer. For years the credit market has been shrouded in mystery but our revolutionary tool brings together the key components to give you the full picture, and crucially, what it means for your acceptance chances and how to boost your creditworthiness.

A credit score alone isn't enough to borrow, as there are other factors at play (it's why many with perfect scores still get rejected). Credit Club shows you...

Beware your debit card  it could be the worst way to spend

While the right card is absolutely the best way to spend abroad, the wrong one is absolutely the worst way. Let's make this plain  do not use the following cards for spending overseas. Any of the methods in this guide beat them.

Nine debit cards have nightmarish charges every time you use them overseas. With most debit cards, you pay a non-sterling transaction fee for spending, typically around 3% of the transaction, and a charge if you withdraw cash abroad.

But these cards have another sneaky charge: a spending fee of between £1 and £1.50 each time you use your card in a shop overseas.

Imagine you buy something for £5 in a shop. With the worst of these cards, it can end up costing you £6.65 after the non-sterling transaction fee and charges are added on  an entire third more than you'd spend if you used a top card from this guide!

Lloyds Debit Card

Halifax Debit Card

The cards below don't have a specific spending penalty, but instead charge a minimum exchange fee, meaning these are hell for small spends. Without this, a £5 spend on these cards would cost £5.14, but this minimum exchange fee bumps it up to £6 or £6.50...

NatWest Debit Card

Is spending or withdrawing cash cheaper when I'm on holiday?

This all depends on what card you have. If you've a top overseas credit card, spending is always cheaper. Even on cards with no cash withdrawal fees, you'll usually still pay interest on the withdrawal until you pay it off (the Barclaycard below is the rare exception to this).

This goes double for non-specialist credit cards. You'll pay the non-sterling transaction fee on all transactions overseas, but you'll also pay a fee and interest on cash withdrawals.

On debit cards, perhaps counter-intuitively, spending is still cheaper. That's because while there's no interest on a cash withdrawal, there's usually still a fee (as well as the non-sterling transaction fee) when you use a cash machine. So, again, spending is cheaper.

If you're looking for a new card to give the cheapest way to spend overseas, check out the best buy specialist overseas cards.

Not all cards are equal  check if the card you're applying for has the Mastercard, Visa or Amex logo

However, most banks then charge you for having them make the exchange for you, and this is where the up-to-3% non-sterling exchange fee comes in.

But some banks and credit card providers waive these fees. They give you the near-perfect Mastercard, Visa or Amex rate without any non-sterling transaction fee. It's these cards that are in this guide, as they allow you to spend the right way overseas. And of these, cards using Mastercard's rate will usually give you the biggest saving.

Best Buys: Top travel credit cards

These specialist cards have near-perfect spending rates but tend to charge fees or interest on cash withdrawals. We've picked out the top credit cards that allow you to spend for free overseas here.

The Halifax Clarity* has been one of our top picks for years due to its great feedback, low rates and no fees on spending or withdrawing cash abroad. It's a Mastercard too, which typically offers better rates than ones from other issuers.

Plus, while Barclaycard below is cheaper for cash withdrawals, apply by 28 Feb 2018 and you'll get £20 cashback after making your first purchase in a foreign currency on the card by 31 Mar 2018. The cashback will be credited to your card account within 90 days.

Need-to-knows

To get the bonus, you need to spend on the card in a currency other than pound sterling, whether abroad or paying for something online.

You don't get charged interest on spending abroad, provided you pay this off in full by the date shown on your statement.

There's no fee for cash withdrawals, yet you'll be charged interest at 18.9% representative APR even if you pay it off in full. So it works out at about £1.50/month for each £100 withdrawn (if you get this APR).

You can minimise this cost: you're only charged interest until you've fully repaid the balance, so if you pay off the withdrawal amount as soon as you can (via internet banking while abroad, or when you get home) you can minimise interest.

The rate you'll get is set by Mastercard  it tends to be higher than Visa's and Amex's rate.

This rate is only for the Clarity credit card, not Halifax's own travel money bureau, which generally offers lower exchange rates.

You can get the Clarity credit card even if you already have a Halifax credit card.

Some poorer credit scorers will get 21.9% or 25.9% APR, which will make cash withdrawal interest more expensive.

Are there any limits on cash withdrawals? If you're making a lot of ATM withdrawals, be aware that you can only withdraw a total of 50% of your credit limit as cash. So, if your credit limit is £1,000 on the card, you'll only be able to withdraw the equivalent of £500 as cash. Therefore it's best to prioritise spending where you can.

The Barclaycard Platinum travel card has no fees on spending or cash withdrawals overseas till August 2022, giving a decent amount of certainty.

And if you pay off your balance in full each month, you won't be charged interest on overseas cash you withdraw, unlike most cards, incl Halifax above, which charges daily interest on cash until it’s paid off.

All-in, if you’d mainly spend on a card, Halifax wins, given the £20 cashback. Also, the fact it’s a Mastercard means it tends to beat the Visa rate Barclaycard has. But if you’ll mainly take out cash, Barclaycard’s zero interest if paid in full makes it a winner.

Need-to-knows

There are no fees for spending or withdrawing cash abroad until 31 August 2022.

You don't get charged interest on spending or cash withdrawals abroad, provided you pay them off in full by the date shown on your statement.

Any cash withdrawals in pounds will be subject to a 2.99% fee (min £2.99) and interest will be charged from the day you make them at 27.9% representative APR, so it's best to avoid.

The rate you'll get is set by Visa  it tends to be slightly lower than Mastercard's rate.

Make sure you pay off any purchases IN FULL or you'll be charged 18.9% interest, which'll quickly wipe the gain from this being fee free overseas.

The Aqua Reward* card is designed for those with lower credit scores, but it still gives unbeatable rates worldwide. As an added bonus, it gives 0.5% cashback on all spending  even abroad (max £100/yr cashback).

However, primarily use this only to spend as its 44.9% rep APR is charged on cash withdrawals even if you clear in full.

Need-to-knows

This card's designed for those with poor credit history and will accept those with past county court judgments or defaults providing they're a year old, or bankruptcies over 18 months old.

Best of the rest

There are a few other cards that don't charge non-sterling exchange fees when you use them to spend overseas. If you're choosing a card, remember that Mastercard's exchange rate almost always beats Visa's rate, so factor this in when making your decision.

We've included Creation, Halifax Clarity, Barclaycard, Santander and Aqua at the top of the table for comparison, but if you already have one of the cards below, it's usually not worth switching as the gains are small. Here are the 'best of the rest' of the cheapest overseas spending cards.

(1) No non-sterling fees until 31 August 2022 (2) You'll pay interest on non-sterling cash withdrawals if you don't repay your balance in full each month. Sterling cash withdrawals attract interest from the day you make the withdrawal. (3) Over 50s only  you may not be accepted if you've four or more credit/store cards. (4) You'll pay interest on cash withdrawals if you don't repay your balance in full each month. (5) New card holders from November 2013.

Get Our Free Money Tips Email!

For all the latest deals, guides and loopholes - join the 10m who get it. Don't miss out

Best Buys: The top overseas debit cards

It's also possible to get non-sterling transaction fee-free debit cards, but to do that you'll need to genuinely shift bank account. It's questionable whether it's worth it just for this (as you're forgoing other bank account perks  see Best Bank Accounts), which is why we favour just getting a credit card and using it right.

There are four current account providers offering debit cards without non-sterling transaction fees, although two of them are restricted to certain areas or are only non-sterling transaction fee-free in Europe.

App-based Starling Bank* has a current account that charges no non-sterling transaction or cash withdrawal fees when you use its debit card worldwide. Unlike other banks, it doesn't require you to pay in a minimum amount or have direct debits set up.

Starling Bank is a new challenger bank, which opened applications to its current account in May 2017. It's regulated by the Financial Conduct Authority and has the full £85,000 UK savings safety guarantee. For now it has no fees, though it's possible this'll change in future. Initial feedback has been positive  please let us know your experiences with it.

The Metro Bank current account charges no non-sterling transaction fees or cash withdrawal fees when you use its debit card in Europe.

But to open the account, you need to go to a Metro Bank branch, all of which are in London or southeast England, meaning not everyone will be able to take advantage. More branches are opening, but in the same areas.

Need-to-knows

The exchange rate you'll get is set by Mastercard, which tends to be ever so slightly higher than Visa's rate.

If you can't get the accounts above, then another good option for overseas debit card spending is the Virgin Money Essential current account. It has no fee for worldwide spending, but charges a flat £1.50 per overseas ATM withdrawal so try to keep these to a minimum.

It's also a good account for those with previous credit issues such as serious defaults or county court judgments, as you'll be ID-checked but not credit-checked in the same way you would with standard bank accounts, meaning it's open to all.

To open the account you need to go into a branch but after opening you can operate it online. As an added bonus, this account pays 0.75% interest on balances but this can be beaten  see Best Bank Accounts for more options (though all of these are subject to a full credit check).

Need-to-knows

The exchange rate you'll get is set by Mastercard  it tends to be higher than Visa's and Amex's rate.

Spending on the card is fee-free, but cash withdrawals cost £1.50 regardless of amount withdrawn. Also watch out for any extra fees charged by the ATM provider.

There is no overdraft facility as this is a basic bank account which means that anyone can get it, regardless of past credit history.

Can I apply for this basic account with a good credit score? This account features in our Basic Bank Accounts guide. It's regarded as one of the easiest bank accounts to get, but there's nothing stopping good credit scorers getting this account for overseas spending too.

We've found one other account that is useful if you travel a lot, though you'll have to live in the northwest of England or southwest of Scotland to get it.

Cumberland Building Society: If you have a standard, Reward, Offset or Cumberland Plus current account with Cumberland Building Society, it charges no foreign exchange fee or cash withdrawal fees on the debit card that comes with the account. However, you need to live in its operating area  it has branches in Cumbria, Lancashire and Dumfries and Galloway.

Currency & credit cards Q&A

Do I get the rate on the day that I spend on the card?

No. On all of these cards, there is a processing time. So, you actually get the rate on the day the transaction is processed by your card provider, which is usually a day or two after you used the card, but could be up to a week later.

This is important, as if there are movements in the currency markets between you making the purchase and your card provider processing it, then you could end up paying more (or less) for what you bought than you thought you were going to.

Do the same rules apply when buying off overseas websites?

Absolutely. You'll tend to pay the same costs on foreign websites as if you were actually abroad and spending there. If you're paying in a foreign currency, all the usual charges apply  the same cheap cards are cheap, the same expensive ones costly.

If I spend abroad and they let me pay in pounds, is it worth it?

This is called dynamic currency conversion and usually should be avoided. Often the rate you get will be appalling and someone will be making big money out of it.

If you've got one of the specialist overseas cards, you'll get a much better rate paying in the foreign currency rather than pounds.

Even if you're using a normal card, as you've no idea of the relative exchange rates, they could be playing you for a fool, so it's usually best to stick with paying in the foreign currency. For a great example of this, read Martin's euro exchange analysis.

If you're travelling to Spain, watch out for this when withdrawing money from cash machines too. You'll often be asked if you want to have your money converted into sterling when withdrawing euros from ATMs. The general rule is to say no, as you could get a worse rate than the one you'd be given by your own plastic provider.

A few machines now tell you the commission/non-sterling transaction fee they add to the currency. If this is less than your card's own non-sterling transaction fee (eg, it's 2.5% and your card is 2.75%), opt to pay in pounds. But if you have one of the specialist cards featured here, they're always unbeatable, so select euros.

My card was blocked while I was abroad. Can I prevent this?

To prevent fraud, most card companies track unusual transactions, and if there's evidence of them, they slam the brakes on and stop the card being accepted.

The best thing to do, unless you're a regular traveller who frequently spends overseas, is to call up the card company to let it know you're going abroad. Usually, though sadly not always, this stops any problems. If it happens to you while you're away, call the card company as soon as possible.

When's the best time to buy currency?

There's no right answer to this, which is why this guide focuses on how to get the best rate at any moment. If the pound is strong and the euro or dollar weak, many people think, "I'm not going away for a few months, but I'll grab my cash now." If the pound's weak, many want to hold off.

The fact the pound is strong at any time doesn't mean it won't get stronger, and therefore buying your currency early can lose you money. Conversely, the fact it's weak doesn't mean it won't get weaker. Playing the currency market is something highly paid traders can't always get right. Those who do make a fortune; those who don't lose a fortune.

If you're going to get the cash out on a specialist overseas card, then it's better to wait until you're there.

However, if you're just planning to use a normal card or convert pounds when you're out there, there's no guarantee you'll get a better rate  and certainly changing in most hotels is normally a bad idea as they give poor rates. Overall it's safer to use TravelMoneyMax and get the cheapest rate while you're here.

Hidden holiday spending charges

Four main charges apply

A 'load' on top of the exchange rate (debit and credit cards)

While exchange rates change daily, what you get always depends on the 'Visa/Mastercard wholesale rate'. It's about the best exchange rate possible, as it reflects currencies' real interchange value.

This should mean more euros, dollars or Costa Rican colons per pound, but unfortunately almost all cards secretly add a 'load', an extra charge, usually of 3%. So the higher the 'load', the worse the exchange rate you get. This means £100 worth of euro spending costs you £103. Worse still, it isn't broken down on statement, so you won't notice .

Technically, there are two types of loading on cards.

The issuer fee is the load Visa adds itself, which has a standard setting of 0% in Europe and 1% for the rest of the world.

The optional fee is added by the card provider, as its cut of the currency conversion. This can be split and altered, depending on each worldwide region.

Cash withdrawal charges (debit and credit cards)

Withdraw money from an overseas cash machine and the card provider will add a fee, usually around 2.5% of the amount withdrawn with a minimum of around £3. Many people are aware of this charge for credit cards, but it's important to note it applies to most debit cards too.

Many overseas banks, especially in the USA, also charge an additional fee for withdrawing cash. Little can be done about this, except trying a few different banks to find the cheapest. Thus taking larger amounts out to cover a longer period is cheaper than lots of small withdrawals, though make sure your cash is stored securely.

A penalty for spending (debit cards only)

Sadly, a few card providers have decided to take profiteering from holidaymakers up a level. Spend on a Halifax, Intelligent Finance, RBS, NatWest, Santander or Lloyds TSB debit card and you'll pay a fee each and every time. For example, Halifax adds £1.50 per transaction.

This means that the normal 'paying on the card's cheaper than making withdrawals' rule is defeated for these cards, so withdraw a large cash lump instead as it's cheaper. See the Holiday Cards From Hell section for more.

Unexpected interest charges (credit cards only)

Normally repay a credit card in full at the end of the month and you don't pay any interest. Yet withdraw cash and even if it's paid off in full, many providers still charge interest, often at a higher rate than spending.

While this isn't exclusive to withdrawing cash abroad, in the UK it's rarely noticed as credit card cash withdrawals aren't common. Those who don't pay off in full will, of course, always be charged interest.

Representative APR

Where credit cards or loans use a representative APR, this means that 51% of successful applicants will be given the stated interest rate.

Credit Cards

With credit cards, the rate for purchases (as opposed to balance transfers or cash withdrawals) is used as the main rate to advertise the card.

So if that is described as 19.9% representative APR, then 51% of people accepted will get 19.9% APR, but 49% will get a different rate (likely to be higher).

Personal Loans

Loans are slightly simpler as they only have one rate. So if a loan is advertised as being 7.5% representative APR, this means 51% of accepted applicants will get 7.5%, and 49% will get a different rate (likely to be higher).

Of course, some people will be rejected outright for the card or loan too.

What the * means above

If a link has an * by it, that means it is an affiliated link and therefore it helps MoneySavingExpert stay free to use, as it is tracked to us. If you go through it, it can sometimes result in a payment or benefit to the site. It's worth noting this means the third party used may be named on any credit agreements.

You shouldnt notice any difference and the link will never negatively impact the product. Plus the editorial line (the things we write) is NEVER impacted by these links. We aim to look at all available products. If it isn't possible to get an affiliate link for the top deal, it is still included in exactly the same way, just with a non-paying link. For more details, read How This Site Is Financed.

How this site works

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.

Do note, while we always aim to give you accurate product info at the point of publication, unfortunately price and terms of products and deals can always be changed by the provider afterwards, so double check first.

We don't as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it's rarely made public until it's too late (see the Section 75 guide for protection tips).

We often link to other websites, but we can't be responsible for their content.

Always remember anyone can post on the MSE forums, so it can be very different from our opinion.

MoneySavingExpert.com is part of the MoneySupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code.